Thursday, October 25, 2018

Proposition 112 In Colorado -- For The Record -- October 25, 2018


October 26, 2018: setback proposition will pass if polls are correct. Polling shows 52% of Colorado folks in favor of setbacks.

Original Post 

Two readers sent me a link to this article / op-ed piece regarding Proposition 112 in Colorado. The second reader wondered whether I was aware of this issue since he has not seen one post on the blog regarding Proposition 112.

Here was my "not-ready-for-prime-time" reply:
I am very aware of Prop 112 / Colorado. Interestingly, another reader sent me the link to this same article earlier today -- it adds yet another wrinkle of which I was not aware.

I have purposely not mentioned this issue (Prop 112) on the blog (or if I have, I have forgotten) it's because I generally don't want to get into the back and forth of unsettled issues. I know I am inconsistent on that. I'm sure you can find many, many cases in which the issue had not been settled and I continued to blog about it.

As an example, before the DAPL was decided, I wrote about it often but that only because for the Bakken it was impossible to ignore, and the blog is focused on the Bakken. Having said that, I tried very hard to not get into the day in / day out opinion pieces on the merits of the DAPL. I could have spent 24/7 on the DAPL. I'm sure readers will remember it differently than how I remember it. 
I almost never blogged about the activity by the protestors and I have almost no blogs on the court trials of those arrested.

But for me, the Colorado / Prop 112 issue seemed so "peculiar" to Colorado with little direct impact on the Bakken so I chose to ignore it and planned to report on it when the vote comes in.
What I will now add (not in the original e-mail):
Perhaps the real reason I am not posting this story (Proposition 112 / Colorado): if passed, this measure will be so incredibly harmful to the state that I don't even want to think about it
One wonders how many oil companies now headquartered in Denver or who have offices in Denver will simply pack up and leave if the measure passes. I think they all will. I saw it happen in Williston after the last boom in the 1980s. When the bust came in late 1980s, or whenever it was, the oil companies simply left ... literally overnight. All of them -- except perhaps Hess (it remained in the oil capital of North Dakota: Tioga).
Wow, think of the repercussions all the way, up and down the entire oil and gas industry. Even the airline industry servicing Denver would be cut back significantly. When I think of the "oil capitals" in the United States, there are not many: Houston, Ft Worth, Dallas, .... Denver? Wow, can you imagine Denver coming off that list?
When one starts thinking about the economic effects on Colorado if this measure passes, it's almost unfathomable. 
Again, this whole post is "not ready for prime time," but I felt obligated to at least respond to readers who were wondering how I could be missing, perhaps, the biggest energy story in the 2018 election, even if the response is pretty lame. 

Most Fascinating -- October 25, 2018


October 26, 2018: the meeting was a dud! See this note. The beginning of the end.

Original Post 

From twitter:

Earlier, MbS said he would remember who supported him  / who attacked him after the Khashoggi murder.

Finally,  someone has also said never let a crisis go to waste.

Eleven New Permits -- October 25, 2018

Active rigs:

Active Rigs68543568194

Eleven new permits:
  • Operators: WPX (7); CLR (4)
  • Fields: Mandaree (Dunn); Brooklyn (Williams)
  • Comments: CLR has permits for a 4-well Boise/Boston pad in section 24-155-98; WPX has permits for a 7-well St Anthony pad in section 9-149-93;
Operator transfer: another 25 Madison wells transferred from Hess to Scout Energy Management; all in the Medora Heath-Madison unit.

The Market, Energy, And Political Page, Part 5, T+68 -- October 25, 2018

Fitzsimmons: COP hits a grand slam.
  • ConocoPhillips' Q3 EPS report was proof positive its strategic plan is working to perfection
  • led by the company's leading Eagle Ford position, it earned over half-a-billion bucks in the Lower 48 segment
  • the Alaska segment also was very strong, delivering net income of $427 million, up more than 4x yoy
  • COP is one of the highest quality global E&P companies in the energy sector and is a free cash flow cow at current oil and gas prices.
Original Post

First slide below, from the COP 3Q18 presentation
  • Adjusted earnings y-o-y --
    • 3Q18: 1,595 million
    • 3Q17: 198 million
    • ratio: 8x
  • On a per share basis, y-o-y --
    • 3Q18: $1.36
    • 3Q17: $0.16
    • ratio: 8.5x
And yet says:
ConocoPhillips reported on Thursday a fourfold jump in its third-quarter earnings, easily beating analyst expectations, as higher oil prices helped the U.S. firm to book higher realized prices across all commodities. ConocoPhillips posted third-quarter earnings of US$1.9 billion, or US$1.59 per share, up from US$400 million, or US$0.34 per share, earnings for the third quarter of 2017. Adjusted earnings—excluding special items —came in at US$1.6 billion, or US$1.36 per share, jumping from adjusted earnings of US$200 million, or US$0.16 per share, in Q3 2017.
Apparently, many, many ways to report things -- "four-fold = 8x"?

COP: earnings call today. Slides here. Fourteen slides.

ISO New England: stayed well below $100 this morning. But it's going to be interesting to watch when we have first "cold snap" in Boston.

The gap widens, link here. Natural gas is up 1.43% today.

I still think the "natural gas story" could be the energy story of the year (calendar year 2018) -- the real question is whether it will be US regional, US national, regional/global, or global. US regions to watch: New England. Outside the US: British Columbia along the coast.

The Market, Energy, And Political Page, Part 4, T+68 -- October 25, 2018

Drill, baby, drill: this would not have happened under Bush II or Sir Saint Obama -- link here --
The first oil and gas production wells in federal Arctic waters have been approved by U.S. regulators.
The Bureau of Ocean Energy Management on Wednesday announced it issued a conditional permit for the Liberty Project, a proposal by a subsidiary of Houston-based Hilcorp for production wells on an artificial island in the Beaufort Sea.
The approval follows through on President Donald Trump’s promise of American energy dominance, said Interior Secretary Ryan Zinke. Comment: I cannot recall an Interior Secretary (in the last twenty years), moving as quickly as Ryan Zinke. He must know that he may only have four years.
The Arctic and Obama's dithing. And many, many articles on closer cooperation between Russia and China to develop the Arctic. Here is just one of many.

Because of Obama's dithering -- or more accurately, his policy decisions -- he gave the Russians/Chinese an opportunity to move into the Arctic well ahead of the US. Fortunately I don't think it will matter but had Obama been elected for a third and fourth term (Hillary), the US would have written off the Arctic. I don't think folks realize it but oil exploration in the Arctic is about a lot more than just oil / natural gas production. Just as NASA's space program was about a lot more than just landing a man on the moon ... and returning him safely to the Earth. Tang. LOL. By the way, whatever happened to Tang. From wiki:
The Tang brand is currently owned by Mondel─ôz International, a 2012 North American company split off of Kraft Foods Inc. 
Sales of Tang were poor until NASA used it on John Glenn's Mercury flight in February 1962, and on subsequent Gemini missions. Since then it has been closely associated with the U.S. manned spaceflight program, and created the misconception that Tang was invented for the space program.
It wasn't. When was Sputnik? 
The Soviet Union launched it into an elliptical low Earth orbit on 4 October 1957.
If Tang was not invented for the space program the timing was certainly coincidental. LOL. Again, from wiki:
Tang was formulated by General Foods Corporation food scientist William A. Mitchell in 1957, and first marketed in powdered form in 1959.

The Market, Energy, And Political Page, Part 3, T+68 -- October 25, 2018

The next big thing: I assume folks have started seeing ads for Capital One Cafes now. This is very, very interesting. I'm not sure what it's all about, (n)or where it will lead. But I am also noticing this: the local Starbucks is now being used by those waiting for their flights from DFW. They come in with their roll-on luggage, do some work, and when it's time to board, Uber / Lyft arrives. Obviously due to TSA, etc, they need to leave a bit early but thinking a bit outside the box, one can see where this might lead. Or not. But that Capital One Cafe -- now, that's interesting.

Music and dance. What is it about "humans," that we love music and we love to dance? The music part: Steve Jobs -- was he really, really lucky or was he really that smart? A little of both, perhaps.
Folks are paying $14.99/month for Apple Music -- two nights ago my wife heard a version of "Have You Ever Seen The Rain" over the closing scenes of a particularly poignant NCIS: Miami. She wanted to download that version to her playlist and she was willing to buy it. After a bit of searching -- that's a story in and of itself -- I found the version she was looking for. It was on YouTube -- done by an indie and had less than a thousand views. But she wanted that song. I downloaded it and converted it to an MP3 (three clicks?) and she had it. The next step: moving it to her iTunes Playlist.

Let's move on.

At the YouTube site with less than a thousand views, there were four comments.

  • the first: "I loved that song...
  • the second: "I did, too.... I can't find it anywhere....
  • the third: "It's by Jonathan Clark. I hope it's at the iTunes store soon....
  • the fourth, from a company representative: "It will be available on iTunes soon."

  • Anyone who doesn't think companies don't have people employed to watch social media ... The internet of things, I tell you, is well beyond what most of us think.
    That was Tuesday night. Last night, 24 hours later, my wife rushed into the room in which I was watching the Red Sox-Dodgers game and told me the song was now on iTunes.

    She had paid her $1.29 and it was now "officially" on her playlist.

    I said for $14.99/month she could have so much more .... she said she would never spend $14.99/month for music. LOL. Let's see what happens a year from now.
    By the way, I hated that version and had to listen to it all night while looking for it, converting it, downloading it, moving it, etc.
    Time travel. Last night I talked to my brother-in-law who lives in Huntington Beach, south of Los Angeles. He called to ask me if was watching "the game." We talked, and then I mentioned that I thought Arches National Park, or more generally, the national parks in Utah were #2 among the nation's parks -- Grand Canyon, #1, followed by the parks in Utah, and then Yellowstone, #3. He said Yellowstone was still #1 or #2. Be that as it may, he said that he happened to be in Arches National Park and Moab, Utah, last week. I was, too, driving back from Montana. For all we know, we were in the park the same same day/same night. I visited the park but drove through Moab on the way home. He and his wife stayed overnight in Moab. Wow, what a great country. Both of us "500 miles" away from home and unbeknownst to both of us, probably passed each other on the highway.

    The internet of things:
    Broken down into its component parts the Internet of Things is four separate Internets. It is comprised of an: Internet of Me; Internet of Us; Internet of It; and, an Internet of Those. The first two categories are the sensors that will collect information about one specific person or groups of people. The latter two categories are the new sensors coming on line that won’t collect information about people at all. The Internet of It will collect information about one device and the Internet of Those about many devices.
    More at Forbes, 2015. My wife is very, very afraid of IoT. I love it.
    And again, it will be blockchain.

    The Market, Energy, And Political Page, Part 2, T+68 -- October 25, 2018

    Jobs. Link here.
    • forecast: 212K
    • actual: 215K
    Silver coins. A few weeks ago I was looking for a couple of silver coins. The two that I wanted were "sold out" or otherwise unavailable (or very, very expensive) at the "big sites." We have one of the biggest coin shows in Grapevine, Texas, every other month or so, and the coins I was looking for, were unavailable there, also. So, I ordered, over the internet, from an independent dealer, as they say, and got the coins for less than half price of the going rate. I received the package two weeks ago (?) but I didn't open it until a couple of days ago (I actually forgot all about them). I looked at the return address. It came from "M____ Plumbing, Inc." I won't disclose the address but suffice it to say it came from the far west United States, but not the west coast. And not Montana or Idaho.

    Technology is wonderful. Using google maps, I checked out the address. This is the screenshot of the map where "M____ Plumbing, Inc." is located and a screenshot from street level. What a great country. Nothing ceases to amaze me any more.

    By the way, "M_____ Plumbing, Inc." does not show up on any google searches. 

    Internet of Things. Nothing ceases to amaze me any more. Yesterday morning, I had an appointment at an undisclosed location for undisclosed reasons about which I may write at a later date. I arrived at 5:35 a.m. For a 6:00 a.m. "appointment." Very austere ante-room.  A very long service counter. A few faux leather-covered chairs. A flat-screen television on a side wall.  I thought I had walked into 2001: Space Odyssey  -- not the movie set, but the real thing, except now, 2021: Twenty Years Later. It's here: the internet of internets and daily life. At least it's here in north Texas. 

    The concierge was incredibly efficient. Maybe ten words (I exaggerate) but that's all that were needed.
    Upon arrival, I was greeted by my first name (or maybe she said "Mr ...." -- I forget; it doesn't matter). I walked up to the counter -- pristine -- the counter was so white, the touchscreen monitor (monitor only; no keyboard, no mouse, no separate CPU) so white; the floor, so white; the walls so white, everything just blended into one huge white space -- she asked for three plastic cards that I carry in my billfold. One at a time, both sides, the cards were slipped into a credit-card-size slot and the monitor responded, "Scanning ... Scanning .... Scanned."

    After those three cards were scanned, front and back, then several screens followed that displayed my entire life, or at least that part of my life that mattered to the concierge at that point in time. [Anyone who thinks the government doesn't know everything about you...]

    One of the cards was my Texas driver's license. I remarked to the concierge that it was amazing that so much information was on my driver's license. She said, "No, very little is on your driver's license, but once we have your name, the [internet of things] scans the universe for any data that is relevant for our purposes."
    I was led to another room by May Belle. The door closed, and all I thought was, "Hal, open the door." 

    Blackchain, to the best of my knowledge, is not yet being used for much/most/all of the internet of internets but it's coming. And it's going to be wonderful. 

    Two hours later, "Hal" opened the door. The only thing lacking: a gift shop that sold silver coins or hand guns. This is north Texas.

    Quick: speaking of north Texas, in what city did the wedding in Rocky Horror Picture Show take place?

    Time Warp, Rocky Horror Picture Show
    Answer: Denton, Texas

    This weekend our oldest granddaughter has a water polo tournament in .... Denton, TX.

    The Market, Energy, And Political Page, T+68 -- October 25, 2018

    Top story in WSJ: Khashoggi. Link here. You just know that every "statement" coming from Saudi Arabia on this issue is being "word-smithed" by the Crown Prince himself. This will be a most interesting diplomatic exercise. Except for the magnitude of the loss, it's the same behavior we've seen from Saudi Arabia before. Trump will likely mishandle this. To some degree he has already has. Scratch that "to some degrees." He has already mishandled it. He has no trouble tweeting the obvious with literally no "proof" on any other subject, but on this one, he has tweeted almost nothing. The Crown Prince now suggests that the murder was pre-meditated. I assume there was some blood splattered during the murder, but yet the deceased man's suit was completely clean. They had to have removed his clothes before he was murdered and kept them out of harm's way -- the clothes would be needed for the look-alike when he wandered out of the consulate and dithered in front of CCTV cameras. "Points to premeditated ... " Give me a break. Saudi Arabia, the country, will bounce along. Whether it's led by MbS is forever irrelevant. No self-respecting American will ever want a photo with this man again. You really think this was done by rogues independent of the Crown Prince? I think it will be fascinating to see how "diplomats" paint this masterpiece.

    December 7, 1941: I wonder if FDR considered the possibility that the Japanese bombing of Pearl Harbor was something other than pre-meditated? Did he ever consider the possibility that the Japanese government had no role in this; perhaps it was just a rogue military outfit? But FDR was out, front and center, tweeting that Japan had stepped over the line, and that the day would live in infamy. A cold-blooded murder in a consulate where everyone should be safe -- and hardly a peep from this president. Not good.

    By the way, speaking of mishandling things. The caravan. This is also being mishandled. I know that the administration is using this to fuel mid-term turn-out but there will be a tipping point at which time it will be too late to act. I'm thinking that the US may be pass that tipping point. A reader suggested we should have closed the border two weeks ago -- the reader was right. The optics are going to be very, very bad. And Mexico no longer has the ability to manage the situation.

    Wow, I'm in a great mood. It's a great day to blog.

    GE and Budweiser: what do they have in common? See below. 

    Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here.

    Panic: folks are panicking over -- have you ever wondered why there's no "k" in panic, but you "panicking" is spelled with one? Same with "panicked." I had to look the latter up just to confirm. Gets back to hydraulic fracking. They say English is one of the hardest languages to learn. Pashto and Putonghua are harder, I suppose. I know the dialect that Bush II used was difficult for some.

    Panic: folks are panicking over the plunge in WTI. As if.

    Panic: folks are panicking over the volatility of the stock market. No panic when the market is on a steady climb, but a correction and all hell breaks loose. This is another rare buying opportunity. There's a story at the WSJ on this. If I find it again, I will link it.

    COP: increases dividend 7%. After awhile, these dividend increases are significant. Of the majors, COP is betting big on shale oil. One of every four bbls of oil that COP produces is shale oil. In the Bakken, COP is represented by BR.

    Red Sox: I'm not a baseball fan, but I am a sports fan. The first two games were incredibly entertaining, especially if one were a Boston fan. And I am. Even my brother-in-law, lives just south of Los Angeles, favors the Boston Red Sox. I don't think it has anything to do with Los Angeles or the Dodgers per se, it's just that the Boston fans are just such incredibly good fans, it's great to see their team doing well.

    TSLA in WSJ here, with 206 comments, so far. The "graphic" is very, very impressive. The headline does not give Elon Musk the justice he deserves (?). The graphic is incredible. Two consecutive quarters will be a nice start.

    Didn't see this coming. I stopped all alcohol intake sometime after May 22, 2018 -- since then, one beer. It was actually on two occasions, but less than half a bottle each time. The most recent: last night: about a fourth of an IPA. I was celebrating a 72-hour fast. Had part of a summer sausage sandwich but the condiments ruined it for me. Some days I think I could live on one Starbucks coffee and a chocolate-filled croissant -- for the entire day. LOL. I quit all alcohol intake -- it's been five months now -- except for that cumulative one bottle of IPA -- for myriad reasons. I will probably go back to Scotch again some day, but right now, no urge. When in Montana, I had the best non-alcoholic Bloody Mary, ever.

    Didn't see this coming. I got off on a tangential in the previous paragraph. My re-entry into the subject came in at a bad angle and I glanced off at 45 degrees. What I was going to write about -- AB InBev -- the beer company -- slashed its dividend as it reported weaker profit and lower volumes in several key markets, underscoring the Budweiser maker's struggle with declining beer consumption. Link here over at WSJ.  GE and Budweiser: both slashing their dividend. Did I mention that COP increased its dividend by 7%? Just saying.

    Mexican-Honduran-Guatamala caravan grows. I'm hoping they are funneled to sanctuary states. I've always said, as someone who lives in Texas, I love states that declare themselves sanctuary states. If I was an illegal migrant, I know where I would be headed. Just saying.

    Hurricane Willa: just one more problem for Mexico. I do think the country has passed its ability to effectively govern. It probably passed that point some years ago, but I think it's becoming more obvious.

    Saudi Arabia: needs to diversity. See this link. Contract killing is probably not a growth industry.

    This Is Not An Investment Site ....

    .... do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here.


    Link here. Profit rises; more cut television cord, but internet subscribers jumped 70%, y-o-y. Net profit rose over 9%. Secured control of European pay-TV giant Sky last month. 

    CMCSA - NBCUniversal News

    Megyn Kelly expected to lose show soon over "blackface" remark. Link here. Why do people who should know better even us the word "black" on the air? I'm even hesitant to use that word in public. I think most folks know the real story here.


    COP 3Q18 SEC filing:

    Third-Quarter Highlights and Recent Announcements
    • Cash provided by operating activities was $3.4 billion. Excluding working capital, cash from operations of $3.5 billion exceeded capital expenditures, dividends and share repurchases by $0.6 billion.
    • Third-quarter production excluding Libya of 1,224 MBOED; year-over-year underlying production excluding the impact of closed dispositions grew 6 percent overall and 28 percent on a production per debt-adjusted share basis.
    • Year-over-year production from the Lower 48 Big 3 unconventionals grew by 48 percent.
    • During the quarter, achieved first production from Bohai Phase 3 and from the final phase of drilling at Bayu-Undan. GMT-1 achieved first production in October.
    • Ended the quarter with cash, cash equivalents and restricted cash totaling $3.9 billion and short-term investments of $0.9 billion, equating to $4.8 billion of ending cash and short-term investments.
    • Repurchased $0.9 billion of common shares outstanding, bringing year-to-date repurchases to $2.1 billion.
    • Reached a settlement agreement with PDVSA to fully recover an arbitration award of approximately $2 billion; recognized cash and commodities totaling $345 million in the quarter, with the remainder of the approximately $500 million in initial payments due in the fourth quarter.
    • Announced Barnett and Greater Sunrise dispositions for $580 million before customary adjustments.
    • Received credit rating upgrades from Fitch and Moody’s.
    • Announced quarterly dividend increase of 7 percent to 30.5 cents per share. 
    The dividend increase was previously reported.

    Tesla Reports A Quarterly Profit

    If sustained for two quarters in a row, we have a winner. Wow.

    TSLA was up "huge" before earnings were announced yesterday after the market closed. Let's see what TSLA is doing pre-market: up over 10%. Up over $30.

    3Q18 MAGA Deal Activity Hit Highest Value Since 3Q14 -- October 25, 2018

    Scott Adams: this is probably a better line than he realizes --
    My first thought was that the bombs came from a Republican. Then I learned the bombs did not work.
    MAGA - deals: mega deals push M7A value to $123 billion in 3Q18. Rigzone 

    LNG and geo-politics: another nice article with lots of stats, over at oilprice.

    Back to the Bakken

    Wells coming off the confidential list today -- Thursday, October 25, 2018:
    • 34450, SI/NC, MRO, Berry USA 21-18H, Van Hook, no production data,
    • 34121, 752, Petro-Hunt, Van Hise Trust 153-95-28C-27-1HS, Charlson, a nice well; t8/18; cum 28K after one month;
    • 32530, SI/NC, Petro-Hunt, USA 153-95-4A-9-7H, Charlson, no production data, 
    • 29925, 568, Hunt, Nichols 156-90-10-15H-3, Ross, t9/18; cum 11K after 23 days;
    Active rigs

    Active Rigs68543568194

    RBN Energy: energy story of the year? Gas storage inventories are near historic lows. What if this winter turns frigid?
    U.S. natural gas supply continues to set all-time records, and strong production growth is expected to continue. Most of these supply gains will come from the Northeast, where another round of pipeline capacity additions are being completed. But despite all this incremental gas output, a combination of cold weather last winter and hot weather this summer means that U.S. gas storage inventories are likely to end the fall season at their lowest levels since 2005. And even this comparison understates how low inventories are — gas consumption has grown dramatically in the past 10 years, and storage inventories are at all-time lows when considered in terms of the number of days of average consumption. Today, we begin a series on the implications of historically low gas storage inventories, including what the gas market might look like if this winter turns out to be colder than normal.